Apple's Enterprise Business: Perception vs. Reality
November 12th, 2008
"People only see what they are prepared to see."
-- Ralph Waldo Emerson
On Tuesday, it was reported here at TMO that Al Shipp, Apple's former Sr. V.P. of Enterprise Sales at Apple is leaving and won't be replaced. That alone creates an unwarranted perception that Apple's on-again, off-again affair with the enterprise is waning. However, that's not the whole story. The real story is more interesting and more revealing.
Apple's relationship with the enterprise is an endeavor that everyone who dislikes Apple or has an attitude loves to hate. Apple doesn't play by conventional rules in the enterprise because, in fact, Microsoft sets the rules and plays the game. As a result, when there's a convulsion in the Apple-enterprise sphere, pundits fire up their text editors and start to look for synonyms for Doom and Gloom.
Right out of the gate, I'll admit that the departure of Al Shipp looks bad. When someone in a key enterprise position leaves and isn't replaced, the easy, comfortable assumption is that Apple has yet again fumbled away the enterprise market. I expect to see, after TMO broke the news, several stories elsewhere that have a certain, "I told you so," flavor to them. Apple doesn't "get" the enterprise and never will while Microsoft does. So there. That's what they'll say.
Indeed, I will admit that it looks bad on the surface. When Apple acquires high profile people, like Mark Papermaster or loses someone like Tony Fadell, everyone likes to read the tea leaves and draw conclusions about Apple. Those public conclusions often paint a picture that's not accurate, and indeed can paint Apple into a corner.
It's Apple secrecy that causes the problem. Most other companies would, at least, paint their own picture that purports to explain, in a rational way, why the change is happening. That way, if a reporter goes off half-cocked, Apple can calmly point to their press release as their side, the official story.
For a company for whom perception is everything, Apple allows observers to develop wild misperceptions. It's almost as if executives at Apple love to see mistakes made by writers and then revel in how lousy the press is. It's a happy and comfortable conceit.
The sales numbers for Apple specifically in the enterprise aren't public. However, there is evidence, both direct and indirect, that Apple's enterprise sales are doing just fine. In fact, it's not the sales that are fluctuating, but rather the public perception of them, based on various reports and interpretations from time to time.
In addition, to fully appreciate Apple's approach to the enterprise, it's essential to understand Steve Jobs' attitude about sales. Mr. Jobs has made some sharp public comments about Steve Ballmer being a salesman, with the implication that the Microsoft CEO is not a very technical person and will eventually ruin that company.
Also, I have been in a meeting with Steve Jobs in which he had some sharp and negative things to say about sales people -- even though he realized that he also needs them. Executives can do that -- synthesize ideas rather that seize on just one side or the other.
What's ultimately the key here is that Steve Jobs believes that people should want to buy a great computer. Selling them is a great idea, if the customer is willing to believe that buying the best product is the right thing to do. But cleverly and deceptively maneuvering a customer into a sale, when they're playing you against the competition, is not Mr. Jobs' religion.
As a result, Apple behaves in unaccustomed ways when dealing with enterprise customers:
- Apple doesn't allow itself to be locked in, losing degrees of freedom, in product design or longevity.
- Apple believes that customers should want to come to Apple because Apple makes the best computers in the world.
- Apple believes that a company can sell the best or be the biggest, but not both.
This is the only way Apple can approach enterprise customers who are often in the throes of a painful but profitable love affair with Microsoft. In fact, IT people who aren't very technical love to play one vendor against the other to get the best price but not necessarily the best product or the best service for their customers.
Apple's 10-K report for Fiscal 2008, for the first time, mentions the enterprise.
"The company sells to consumer, small and mid-sized business ("SMB"), education, enterprise, government, and creative consumers."
That's a statement of market direction and intent backed up by growing sales in the enterprise, not declining sales.
One way Apple is selling to the enterprise, in an industry controlled by Microsoft, is a back-door halo effect that undermines Windows Mobile with the iPhone and creates a demand for the corresponding excellence of Macintosh products. Another is to let the consumer enthusiasm for great products seep into the consciousness of business people. Just take a look at Tim Cook's introduction on October 14 of the new MacBooks. His comments reveal Apple's approach for anyone willing to listen. One in particular struck me as more than self-serving elitism. It's Apple's mantra.
"The Macintosh is far superior to anything else on the market," TIm Cook said.
If you don't believe that, you're not going to become an Apple customer, no matter what the salesman says. Accordingly, Apple isn't going to bend over much for the naysayers who walk a different path.
Being an Apple Customer on Apple's Terms
The bottom line is that Apple is going to approach enterprise on its own terms. The company needs inside sales and field sales people to close the deals and take the money. However, when it comes to an enterprise sales strategy, Apple doesn't really want, for example, whiney IT people asking Apple's factory to disable the camera in the MacBooks for security reasons. They don't want some government agency demanding that Apple produce the PowerMac G5 until the year 2017. Ultimately, what Apple does want is for customers to come to its products on their own free will.
If Apple sales executives do well at sending that message of excellence and garnering the same level of sales that drives consumers into a frenzy when a new iPod touch or MacBook Air comes out, then great. If not, there are plenty of of those darned Apple sales guys who'd like to give it try.
I don't know why Mr. Shipp is leaving. It could be personal or it could be a power struggle or difference of opinion with Sr. V.P. John Brandon. Or it could be, just like with many Apple employees, that his euphemistic tour of duty came to a natural close. However, one thing that's not likely to happen as a result is reduced emphasis on selling more Macs to more business customers. Mr. Brandon has a history of low profile and high success.
For the foreseeable future, there will be enterprise customers and writers who don't get that part of Apple and want to force the company into a traditional mold. It won't happen on the watch of Steve Jobs or Tim Cook.
John Martellaro is a senior scientist and author. A former U.S. Air Force officer,he has worked for NASA, White Sands Missile Range, Lockheed Martin Astronautics, the Oak Ridge National Laboratory and Apple Computer. During his five years at Apple, he worked as a Senior Marketing Manager for science and technology, Federal Account Executive, and High Performance Computing Manager. His interests include alpine skiing, SciFi, astronomy, and Perl. John lives in Denver, Colorado.
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